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Rates will have to wait a little longer before starting to rise, according to Fed

The Federal Reserve (Fed) from USA it should start cutting asset purchases after its next meeting in early November, although rates will have to wait before rising, said Christopher Waller, one of its governors.

“I think we have made enough progress (on the employment front) for the reduction in our asset purchases to start after the next meeting” on November 2-3, he stressed.

He described a “job market that has seen a healthy recovery, but is not completely healed,” during his speech at Stanford University (California).

Waller believes, as Fed Chairman Jerome Powell previously indicated, that asset purchases should be reduced to zero by mid-2022.

The reduction rate can slow down or accelerate depending on the evolution of economic conditions, he said.

“I don’t expect the key rate hike to start soon after the end of asset purchases. The two political actions are different ”, he anticipated.

As for inflation, higher and more persistent than expected, it continues to “think” that it will be “transitory” and will return to its goal of “2% next year.”

Another Fed Governor, Michelle Bowman, stressed in a separate speech Tuesday that it will be time before “the full effects of the pandemic become apparent.”

“Even those who are working may have fewer opportunities to change careers, or their jobs and finances may be too precarious to take the time to improve their education or skills,” he noted.

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